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"At a time when some asset managers are inundating investors with confusing, complex products, we’re experiencing greater demand for our straightforward, transparent products that deliver great value on their own or with professional management built in"

SAN FRANCISCO--(BUSINESS WIRE)--Charles Schwab Investment Management (CSIM),
a leader in both target date funds (TDFs) and exchange-traded funds
(ETFs), announced today the launch of Schwab
Target Index Funds – a new series of index-based target date mutual
funds constructed with low-cost Schwab ETFs™ as underlying investments.
The new funds are the lowest-cost target date mutual funds available to
employer-sponsored retirement plans, with an across-the-board expense
ratio of just eight basis points (0.08%) and no minimum investment
requirements regardless of plan size1. Until now, receiving
the most competitive pricing on target date funds could require a $100
million minimum investment or more from retirement plans.

Outside of retirement plans, Schwab Target Index Funds are also among
the lowest-cost target date mutual funds available to individual
investors at 13 basis points (0.13%) with only a $100 minimum investment1.

The new series includes funds with target retirement dates between 2010
and 2060 in five-year increments. A complete list of Schwab target date
mutual funds, including the new funds and their ticker symbols, can be
found here.

Schwab Target Index Funds are an important addition to Schwab’s
well-established TDF suite, first launched in 2002, which includes
mutual funds and collective trust funds, open architecture construction
and active and passive strategies.

“Today marks an important day of democratization for employers,
retirement plan participants and self-directed individual investors,”
said Marie
Chandoha, president and chief executive officer of Charles Schwab
Investment Management. “With Schwab Target Index Funds, every retirement
plan gets the same low price with no investment minimums. That means
plan participants no longer have to pay for a more expensive target date
fund just because they work at a smaller company. On the retail side,
we’re proud to offer individual investors a professionally managed
retirement solution at an exceptionally low price. As the latest example
of Schwab’s long history of driving down costs, these new funds are
important milestones for our industry, and great news for retirement
savers.”

Cost Matters

The underlying assets in Schwab Target Index Funds are primarily
Schwab’s market-cap index ETFs, each of which has the lowest operating
expenses in its respective Lipper category2. It is the result
of this construction that allows CSIM to offer the new funds at such low
prices.

The impact of keeping expenses down is enormous, especially for products
designed to be held over a long period of time. To demonstrate that
point, CSIM has released a short
motion graphic illustrating how lower fees alone can mean a
significant increase in savings at retirement.

Retirement plan participants appear to understand the impact of cost. New
data from Schwab finds fees are top of mind when workers choose to
invest in their plan’s TDFs, second in importance only to the fund’s
5-year performance record3.

“At a time when some asset managers are inundating investors with
confusing, complex products, we’re experiencing greater demand for our
straightforward, transparent products that deliver great value on their
own or with professional management built in,” said Chandoha. “Schwab
ETFs function as key ingredients we draw on to develop affordable
managed solutions like Schwab Target Index Funds. We think this is
uniquely powerful and relevant against the backdrop of changing client
expectations.”

A Consistent Glidepath

The asset allocations in Schwab Target Index Funds are adjusted annually
and become more conservative over time according to a predetermined
“glidepath.” This reflects both the need for reduced investment risk as
retirement approaches and the need for income after retiring. Since CSIM
launched its first set of target date funds in 2002, all Schwab TDFs,
including this new series, have used a consistent glidepath approach
that continues not just to – but through – the anticipated retirement
date.

At its starting point, the glidepath for the longest-range fund (Schwab
Target 2060 Index Fund), begins with an asset mix of approximately 95%
equity, 5% fixed income, cash and cash equivalents. At their target
retirement dates, each fund reaches approximately 40% equity, 60% fixed
income, cash and cash equivalents. Each fund then continues reducing its
equity allocation for an additional twenty years to reach its most
conservative and final allocation of approximately 25% equity, 75% fixed
income, cash and cash equivalents.

“Our new Schwab Target Index Funds provide automatic diversification and
ongoing professional management at remarkably low prices,” said Jake
Gilliam, senior multi-asset class portfolio strategist at CSIM. “Coupled
with our long track record, we believe these new funds will have strong
appeal to employers, retirement plan participants and individual
investors.”

Visit the CSIM
website for more information about the new Schwab Target Index Funds
as well as Schwab Target Funds, which use a passive/active strategy.

Fees also lowered on Schwab Bank Collective Trust Index TDFs

Schwab also offers TDFs as collective
trust funds (CTFs), and makes them available exclusively to 401(k)
plans and other qualified retirement plans through Charles Schwab Bank.

Among them are Schwab
Indexed Retirement Trust Funds™ (SIRT), which offer passive,
index-based strategies. Effective November 1, 2016, plan sponsors also
will be able to access the SIRT funds for eight basis points (0.08%)
with no minimum investment required, which aligns with the pricing of
the new mutual fund Schwab Target Index Funds.

Founded in 1989, Charles Schwab Investment Management, Inc. (CSIM), a
subsidiary of The Charles Schwab Corporation, is one of the nation’s
largest asset management companies, with more than $280 billion in
assets under management as of 6/30/16. It is among the country’s largest
money market fund managers and is the third-largest provider of index
mutual funds4. CSIM currently manages 88 mutual funds, in
addition to two separate account model portfolios and 21 ETF offerings,
and provides non-discretionary advisory services to the Charles Schwab
Bank Collective Trust Funds.

At Charles Schwab we believe in the power of investing to help
individuals create a better tomorrow. We have a history of challenging
the status quo in our industry, innovating in ways that benefit
investors and the advisors and employers who serve them, and championing
our clients’ goals with passion and integrity.

1 Based on net expense ratios for all target date mutual
funds in their respective Morningstar Categories as of 8/11/2016.There
is no minimum investment requirement for employer-sponsored retirement
plans (including, but not limited to, profit sharing, 401(k), 403(b),
457(b) and defined benefit plans). For individual investors, the minimum
initial investment for the fund is $100 for Investor Shares and
$10,000,000 for Institutional Shares.

2 This claim is based on prospectus expense ratio data
comparisons between Schwab Market-Cap ETFs and non-Schwab Market-Cap
ETFs in their respective Lipper categories. A Schwab Market-Cap ETF is
determined to be the lowest in its Lipper Category if its expense ratio
is equal to or lower than the lowest expense ratio of any non-Schwab
Market-Cap ETF in that category. Securities in Market-Cap ETFs are
selected and weighted based on the size of their market capitalization.
Expense ratio data for both Schwab and non-Schwab Market-Cap ETFs was
obtained from Strategic Insight Simfund as of 06/30/16. ETFs in the same
Lipper category may track different indexes, have differences in
holdings, and show different performance. Competitors may offer more
than one ETF in a Lipper category. Expense ratios are subject to change.

Investors should consider carefully information contained in the
prospectus, including investment objectives, risks, charges, and
expenses. You can view and download a prospectus by visiting www.csimfunds.com/prospectus.
Please read the prospectus carefully before investing.

Schwab ETFs are distributed by SEI Investments Distribution Co.
(“SIDCO”). SIDCO is not affiliated with The Charles Schwab Corporation
or any of its affiliates.

The funds are subject to market volatility and risks associated with the
underlying investments. Risks include exposure to international and
emerging markets, small company and sector equity securities, and fixed
income securities subject to changes in inflation, market valuations,
liquidity, prepayments, and early redemption.

The values of the funds will fluctuate up to and after the target
dates. There is no guarantee the funds will provide adequate income at
or through retirement.

Target date fund asset allocations are subject to change over time in
accordance with each mutual fund's prospectus.

The Schwab Managed Retirement Trust Funds™ and the Schwab Institutional
Trust Funds® are collective trust funds maintained by Charles Schwab
Bank, trustee of the Funds. The Charles Schwab Bank collective trust
funds are not insured by FDIC or any other type of deposit insurance;
are not deposits or other obligations of, and are not guaranteed by
Charles Schwab Bank or any of its affiliates; and involve investment
risks, including possible loss of principal invested. The Funds are not
mutual funds, and their units are not registered under the Securities
Act of 1933, as amended, or applicable securities laws of any state or
other jurisdiction. The Funds are not sold by prospectus and are exempt
from registration under the Investment Company Act of 1940, as amended,
or other applicable law, and unit holders are not entitled to the
protections of the 1940 Act. As more specifically defined in the Funds’
Declaration of Trust and Participation Agreement documents, the Funds
are available for investment by (i) retirement plan trusts that qualify
for exemption from federal income tax pursuant to Section 501(a) of the
Internal Revenue Code (“Code”) because they are qualified under Section
401(a) of the Code, (ii) eligible governmental plans under Section
457(b) of the Code which are exempt from tax under Section 457(g) of the
Code, or (iii) group trusts which consist solely of the assets of these
types of plans. The decision to invest in the Funds should be carefully
considered. The unit values for the Funds will fluctuate, and investors
may lose money.

The Schwab Bank Collective Trust Funds select investments based on
advice received from or products offered by industry-recognized
investment management firms (“sub-advisors”). The Funds access
strategies through various investment vehicles including, but not
limited to, collective trust funds, separate accounts, mutual funds, and
exchange-traded funds. Exposure to some strategies may be indirect
through the investment in other Schwab Bank Collective Trust Funds.